private, how it could happen. trade war? what trade war? the country takes advantage of a weaker yuan as the u.s. slaps more tariffs on chinese goods. the last push on earnings with the s&p near record, well company struggle with profits. >> i am david westin. welcome back. alix: i miss you. >> you look great. .lix: i rested i was sleeping longer than four hours a night. it was like a miracle. we are still around a record high. earnings continue to trickle out. what is very interesting, .ollar-yen down that is the boj story. opinions show some were more

hawkish in the meeting. that means a stronger yen. the 10 year treasury later today , 2.97%. crude off by .6%. it has been a confusing picture. , cvs: speaking of earnings a few minutes ago, good news, beat. they took up their estimate for the year. same-store sales up 5.9%. revenue was better than expected. the big news is the at the deal. etna deal. they have had good earnings. you are not at&t. david:

alix: it is time for the bloomberg first take. we are joined by our gas. i want to talk about glencore. they had a stellar quarter. fact they didn't issue a buyback and did not return .apital to shareholders >> they teased the fact they might be doing this buyback earlier. was a record. still did not quite meet expectations of analysts, which always surprises the market, especially with this. it does look like a shareholder-return question. they didn't talk about raising the dividend or how they would return cash to shareholders. it was kind of vague. david: moving over to disney, a surprising miss.

they missed on revenue and earnings, but a complicated call because there were some extraordinary charges and write offs. espn not losing subscribers as fast as they thought. >> that was a big theme on the call. seem to key in on was that streaming service doing better than expected in terms of subscribers. that seemed to breathe life back into the stock. put talking about how to the disney wrapping paper on this brand and give it a new lease on life, something investors trust disney to do. what moves the needle is how you are dealing with content, streaming, and what is your success in that area? >> and how are you doing with winnie the pooh. david: that is a third quarter the story. alix: that guy?

come on now. david: ok. snap also came out, a complicated story as well. they are down in daily active users, up in monthly, but way up on revenue. >> investors will be looking to see what snap will deliver in the next quarter and whether they can keep revenue strong as it matures. the big news seems to be the investment of $250 million. it came out just before earnings. of evan a press release spiegel snapchat in with a falcon. revenue.s beating on what does that say about the numbers?

i don't think they have to worry quite yet. the second story is huge, tesla. elon musk stirred up the markets. air when we heard that the sovereign wealth fund of saudi arabia had taken a stake in the company. 30 minutes later, elon musk tweeted that he was going to take the company private. they suspended trading a while. tweet, but the detailed memo random said the reason for doing this is all about creating the environment for tesla to operate best. as a public company, we are subject to wild swings that can be a major distraction for everyone working at tesla, all of whom are shareholders.

this is not unique to tesla. other ceos say this. is this a realistic possibility? >> elon musk was talking about getting way from the pressure of the market. the question is how is he going to do this. where is this funding coming from? he has the saudis sovereign wealth fund. we were talking about this earlier today. everyone was reacting like it is crazy, what is going on? there was even a question about whether it was him himself tweaking it. eting it. >> they have given elon musk a

lot. tesla has been able to raise money at nice prices. what does elon expect to get from the private markets that is such better shelter? more to the point, i think he put in a ceiling for the stock. but theit a bid, options that expire in 2019 and 2020 got slammed. david: some people saying that is not enough. you make such an important point. what we just read her all the negative parts. you have the benefits of the halo affect come equity and debt , which she would lose if he went private. he would not have that advantage anymore. only some ceos really deserve

to be able to implement their longview. leadershipa check on and is important for investors. there is also the question of whether these investors could follow elon musk into the private market and deal with the liquidity constraints and be able to express the desire and love for the stock come of the company, and his dream. he is cutting himself off from the group that is helping him. alix: then the sovereign wealth fund comes in and says i have a 5% stake. does he care about the mom-and-pop's? david: they asked to buy, and he said, no thank you. musk initially refused to sell it. his personal wealth went up $900 million.

you can't complain there. alix: let's get to our third story. this chart takes a look at the imports and exports of china, both moving higher, particularly in ports, and now that surplus $28 billion. what do we learn from the export data in terms of global growth, or is this just let stockpile and sell a lot ? >> the read through and the ability to wrap narratives around this is limited. even as you see the strong export growth, there are concerns how much of that was at the start of the month and a rush to beat tariff implementation. survey indicators are suggesting that even if the trade war has not heard china yet, it will. the pmi has been in negative

territory for a string of months. there is cause to be optimistic about the import data picking up, pointing to the reminder that china has the clippers to reverse a domestic slowdown. reallypresident trump is intent on finding out if it is going to hurt. we have another round of tariffs , $16 billion on august 23, 25%, 279 product lines, so the tosident seems to be intent find out if he can slow down the trade deficit. >> absolutely. aree tit-for-tat sanctions something everyone is aware of in the market. we are on the edge of our seats to see this weather of fax people long-term. alix: we were in the newsroom when it came across, and some producers were like,, $16 billion, not that big. is the market, right?

since june 16, global stocks are up, u.s. stocks are up, emerging-market stocks are up. the only thing down our chinese stocks. if you are president trump, you feel emboldened. thank you so much. great to see you. you can find all the charts we .se at gtv coming up, christina uber on why she thinks china is preparing for a fight in that trade war. this is bloomberg. ♪

>> this is "bloomberg daybreak: americas." i am taylor riggs. starwood property trust is expanding, buying the general electric finance business, $2.6 billion, including $2 billion of loans backed by assets. lower drug prices in the u.s. will be a thorn in the side for one company. expects changes in the medicaid program to push down prices next year. drug prices are one of president trump's targets. samsung investing to ramp up production of memory chips and future growth. r&d spending in a number of areas. that is your business flash.

itid: the u.s. announced will slap a second round of tariffs on chinese goods on august 23, including motorcycles comes steam turbines, and 25%.ay cars, >> if this is a ploy, god bless them. >> what if it is not a ploy? aref he believes tariffs the way, go back to the 1930's. it does not work. believer, passionate and that is an in in in of itself, then he will pay a price. david: we welcome christina hooper. ken talk about the

1930's, the average tariffs. it really spiked to a much higher level. , this go off to the right is something goldman sachs brought to us. it is way down, but starts to inch up. you start to get back up in the 6% to 8% range. what is critical is to juxtapose this with a chart showing the percentage of global gdp that can be attributed to international trade. in the 1920's, it was smaller. 25%.the 1960's, 20%, is 58%, so far more impactful today. david: at what point might we see an effect on global growth? >> we are starting to see small signs in terms of growth. much of it is anecdotal and has

not shown up in the data. the fed beige book and the most recent minutes, we see reports from businesses saying they are or forgoto scale back business investment as a result of this. it has not shown up in the data yet, but it may have shown up in jobs data for large companies with employees over 1000. absolutely by the end of the year, i think we will see it get into the official beta. alix: how do you track the narrative around the trade data? the imports and exports continuing to grow. what is the narrative of the data in soft areas and the trade data from china? >> we have been on trajectory towards lower tariffs up until the last year or so, so we are in a transition where we are

moving into a higher tariffs environment. we could see some aberrations in the data. buying in advance of tariffs being implemented, so it is hard to read a lot into this transition data. what it tells us is looking at the trade surplus is that is the normal thing you would see between a country like the u.s. and a country like china. what is unfortunate about the trump administration's approach to this trade dispute is that there is not a prioritization of importance. intellectual property file late in's are widely recognized as an area that should be focused on. if that were poorer ties, instead it is being muddied along with running a trade deficit with a country like china, which is normal and should be expected and part of free trade. david: is the trade deficit linked to a budget deficit?

we are buying more stuff that we can afford. agree there isto unfairness in terms of trade with china. are areas where china has not been open and fair, despite what it says. steps there have been taken to move towards fairness. aina only joined the wto little over a decade ago. i would argue, as the cato institute did, that the correct approach would be for the administration to utilize the wto to encourage greater abiding of intellectual property viewed alix: looking at the biggest and is that trade, the headlines, or rising global bond yields? is there something about the combination that makes you retaliate? >> it could show up in a variety

of different areas. what i would focus in on in general is a reduction in bond yields that suggests some weakness in growth, but it could be as simple as jobs data, as simple as a slowing in economic growth. alix: in addition to global bond yields rising, how much impact is that creating on the market itself? stocks are at record highs, so had you view that? we see yields go up, there is a re-rating of stocks. in the u.s. in particular, it makes sense that we see some kind of pullback in stocks. every time we hit a key level for the 10 year. here. thank you for being coming up, teslas while the day,

elon musk stunning proposal to take the company private next. this is bloomberg. ♪

eet rocked musk's tw wall street and torched short-sellers. the white line is the short percentage of interest versus the last price of tesla. if you are shorting it, you felt a lot of rain yesterday. -- pain yesterday. to put thea game fear of god into the shorts once again. will this come to fruition? i doubt it. but it is elon musk. if you against him, it has been a bad bet. alix: is it really all about the

short-sellers, or is there something more substantive? >> that is anyone's guess. spoke to investor bankers. they had no idea about this. that raises questions whether there is substance underneath it. if he is saying $420 is the price he would acquire the , short-sellers increase their short position. they have a lot of downside in terms of where the stock will go. there is limited upside if they were really buy it. was thatitial reaction is just elon musk, but then he sent a detailed memorandum to employees that cause some people

to say maybe he is serious. he said the reason for doing this is all about creating the environment for tesla to operate best as a public company. we are subject to wild swings that can be a major distraction. being public also subjects us to the quarterly earnings cycle and puts enormous pressure on tesla. that all sounds like he taught this through and is intent on doing it. >> he makes a credible argument the question is where is the money coming from and in what form? will he have to go back to the capital markets and raise capital? he has a triple b credit rating. it is hard to raise that money and be able to a it down every given that they have negative free cash flow right now.

line was before the saudi arabian sovereign wealth and announced it took position there. even softbank, a lot of that was in the form of debt. skeptical about where these investors are coming from. alix: you and many other people. coming up, when you are $10 billion in debt, can the company find money to go private? we will take a look at leveraged buyout's, next. this is bloomberg. ♪ this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. our phones are more than two, just phones.k up. they are pocket sized personal trainers... last minute gift finders... siri: destination ahead. and discoverers of new places. it's the internet in your hand. that's why xfinity mobile can be included with xfinity internet. which could save you hunreds of dollars a year. plus get $150 when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. alix: this is bloomberg daybreak. the s&p sits right around a record. over the last six days, there was $600 billion in market cap gains within the s&p.

european stocks pretty much flat. in other asset classes, there are two things i am watching. it is really about the dollar-yen, lower by 3/10 of 1%. the boj summary of opinions of the last meeting pointed out aat one member wanted to see 25 basis point band on the low-end bond. moving to boj is mitigate side effects other qe program, not a reflation world. a big ship that percolates throughout the market. still brexit fears they will not come to a deal in the next see months -- next six months. david: -- what? -- of the210 spread is a0 spread -- tesla private company would be the biggest lbo in history but can

it actually happened? can a company $10 billion in debt find the money to go private? scott, theis late president of gso capital -- dwight scott, the president of gso capital. you. so good to see is it an lbo? that saye did not see lbo, he said take the company private. it is verykely -- hard to put leverage on this company short of an $80 billion in price value. today, it has $10 billion in leverage and the discussion has been whether or not the company can continue to fund its business without issuing equity into the market. going private is very hard to do. david: i have talked to people

on wall street and they said you have to compare with dell and dell is much stronger -- is much smaller, but dell at the time had 5.5% cash flow. chart that shows the red line is breakeven. this is -$800 million of cash flow. who is going to lend them money to take this private? dwight: people have so far. been in that credit has burst. it is hard to lend much more money to a company that is not only negative cash flow but there are still operational issues the company is working through, a long way from dell. david: even on the corporate finance side, you said something important there. if you went private, you could not do that. you cannot have convertible debt

in a private company. dwight: you can. this conversation is going to get to what this company looks like if it goes private. there are certainly private companies that have converged. tech companies go private all the time and raise capital, large valuations most often it converts. the question is can you go back? can you take we tell investors who are not qualified purchasers , what do you do with them, with the fidelity's that own the stocks? fidelities that own the stocks? we don't know what something like this is. we still don't know what that means in a traditional buyout, when you reduce the equity account and increase the leverage, there is a change of control put in the bonds and that might be triggered. forver there are exclusions

certain structural nuances that you could manage around if you were not trying to put those bonds back to the company. elon musk is said yesterday he had the financing lined up. how reasonable is it that he could have lined up the financing and we have no whisper of it? we cannot find any rumor about any bank or major institution. how likely is that? dwight: i take him at his word. normally he would not disclose something in a tweet that was not true. we have not been involved in the process, so i don't know. if it is lined up, it is likely to be in the form of equity and will be some sort of strategic sovereign type wealth investor. it is not going to be someone like me providing the capital. it is not going to be structured that way. out, i want to point

pimmco came out and said they were getting defensive. think this means lower returns and higher volatility. the combination creates a much more challenging investment environment. about going defensive and if you do, where do you go? dwight: i certainly agree about getting defensive. i am a credit investor so i am almost always defensive. the thing we were talking about with tesla -- before tesla is tariffs and what is happening with tariffs and rising rates, a tightening monetary policy and a tariff discussion makes you be more cautious in credit and we have been for some time. where we like to be when we are cautious is in protected securities. market isged loan where you go to be defensive and

a market that is moving in this direction. yield --vide a higher leveraged loans provide a higher bondsthan on this -- that -- than bonds this year. floating rates are very low duration and they have very high recovery rates relative to high-yield bonds in a default scenario. you would not think it would happen that way and that is one of the reasons we think it is a good opportunity. leveraged loans versus high-yield and you can see this normalize and how leveraged loans are yielding more than high-yield. the pushback to some of that -- the pushback to that is there is no one else behind you and you are still going to take the hit because everyone is still overleveraged because there has been so much clo.

--t is your perspective? what is your pushback? dwight: my pushback is it really does matter. for credit investors, when you have someone in front of you, that is when you have to worry about loss of principal. in the debt capital structure, and there is a default, you have some recovery there. when someone is behind -- in front of you in a bond, they meet all of that and your recovery is zero. thing,ake the covenant it is two issues. one is a maintenance covenant. if the company is not performing a certain way, the banks get to sit back at a table with the company and there is a repricing, a loan pay down, whatever has to happen. the leveraged loan markets really moved away from that. that has been true for some time now. the accordance covenants are

what do you do to protect her capital? how much cash can come out of the system? all of these things that help you feel comfortable when you say your senior security is your senior security. look at the leveraged loans that have maintenance covenants and the ones that don't, the ones that don't trade better on the ones that do because the ones that have maintenance covenants have tougher credits. david: how do you explain what looks it could be a miss pricing it you have high-yield leveraged loans. is it just an opportunity or is there other factors like liquidity? is it easier to take -- get some of the us to take your high-yield bond? dwight: it used to be. today, the high-yield bond -- it has become much more liquid. i think the way you explain it is if i give you money to invest in high-yield bonds and you want

to fund and invest in high-yield bonds, that is what you do. down, so you have a technical thing keeping the bonds up. alix: what about liquidity? bank of america came out and said the biggest fear for credit investors right now was liquidity. in the liquidity securities themselves, we all learned a very difficult lesson in 2008 and 2009, a lot of things we assumed had liquidity and what happened when the market liquidity started going against the funds. they have to sell the better assets because they were the ones that have liquidity. they have all done better in managing that risk over the last few years and we are all aware of it. is other aspect of liquidity market flows and a lot more debt investors are subject to funds flows. as much as i don't want to wish

that things on the market, we have $20 billion of available capital to invest when they funds flows goes the other way. it happened in 2016 around the energy markets, in 2011 around the downgraded u.s. treasury. we almost find ourselves wishing there would be a little bit of that disruption because it gives us a great opportunity to invest. alix: and that $20 billion is not going to tesla. [laughter] alix: part of were a lot of money is going for you is your rescue lending business. the conversation being that as banks pullback, it creates opportunity for you -- pulled back, it created opportunity for you guys. we saw there was a lot more lending going on, we wound up seeing the restrictions are coming down. what does that mean for you? dwight: that is highly concentrated in the large issuance where we see the banks underwriting to bring companies to the market.

we would say thank inventories remain very low, so we have not seen that same aggressive move. where we have not seen the banks move back in, not really in the distress market but in this middle-market world, we have a lot of investable capital. very topical today. in the direct lending world, a company that needs to hundred million dollars or less of debt, the banks are moving away from those types of companies. they have almost moved out of that business in the high-yield market does not like them very much. morewant $500 million or so that they can trade it. for folkss a niche like us to provide capital. back to our defensive thing, these are also senior secured floating rates and they are

quite defensive in this market. david: if the large banks are not going back because they want the big ones they can trade, what about the regional, smaller banks? why aren't they moving in more aggressively? there are not as many there anymore. the number of small banks has they weresize and part of a group of a syndicate that would provide capital to these companies. soy can't do it on their own there are just -- there is just not as many of them anymore. we advance at a little higher advance rate so we provide more capital to a buyout firm. we aree were -- while more expensive than a bank, we provide more leverage. alix: where are the opportunities? we had lunch, we spent the entire time talking about energy, shocker. energy is certainly a

place. energy is interesting right now. we are talking about credit here. we are four years into a down cycle and it has been very interesting. 2014 andd in late trying to get better in 2015. then the floor fell out from under energy in late 15, early 16 and hit the bottom in march. that has discouraged a lot of investors. a lot of investors have moved away from the sector. 2017, the equities get shellacked. -- anybody that held energy was underperforming. back, naturaling gas is a little challenged but

the capital markets are not ready to open the spigots yet. it provides us a unique opportunity to give capital to companies that they cannot easily get from the markets. alix: is negative the in i am hearing ase lot of private equity shops are teaming with the producer to help build pipelines. witht: we just did a deal a company called extraction oil and gas, a public company based in colorado. their assets are in the dj basin. they have been very successful in drilling oil and gas wells. they have limited capital. they need to build their midstream assets. these upstream companies trade at six times and the midstream companies trade at 12 times. they want the value of building out that asset themselves. we provide them the capital to

do that knowing they are going to pay us off and go to the market and try to monetize that i sent -- that asset. we like the fact that the producer is the owner of the system because they have all the same incentives we have to have the flow come on to the system. alix: before i let you go, i want to get your take on credit default swaps. do you think there needs to be more of a reform in the cds market? dwight: certain reforms need to happen in the cds market. alix: if you had a position in cds, would you then extend financing to that same company? dwight: it depends on very specific circumstances. alix: it was so great to catch up with you. dwight scott of gso capital partners. david: we are getting somewhere earnings out. is outr broadcasting

with earnings, $.27 per share. it had a really nice on revenue -- beat on revenue. this is the company that was trying to merge with the tribune stations and the fcc won't let them do that. we're going to turn now to wall street beat where we cover three things wall street is buzzing about. first up, dividends and dismissals. -- boosted buyouts and cuts in staffing. , the myth, the leverage. and finally, papa john's once back after the company most earnings -- company's most recent earnings release, public john-- poppa john -- papa rails against the ceo. >> we will look to make

selective moves on acquisitions but we are looking to turn capital to shareholders. that is less capital because we are cutting investment banking jobs. >> as you say, part of the good news is coming from the fact the they are cutting investment banking which is not a story we often hear. this is a state owned bank. different challenges, different opportunities and even some public pressure anyway the other banks just aren't used to. they are more conservative with their balance sheet as they keep their capital levels even higher. that just makes it kind of a different beast. for the most part, this feels like some decent news coming out of abn. david: the second story, we have

been away from elon musk for way too long. alix: like 10 minutes. david: how are they going to finance this thing? people compare this to dell going private. talk about the key aspect here. it is a really great question and i think everyone is struggling for an analog. dell is the closest thing we think in the sense of both the key man aspect of it, so associated with one person. there are some big differences to say the least. dell was in a position where it was a struggling profitable company. aroundeat tease you out -- you had around leverage. on havingelies something to leverage.

whichve some cash flow by you are going to pay off your debt. this is going to be, if it happens, a completely different deal. david: it is have -- is going to have to be all equity. when was the last time we saw something this big done with all equity? >> never. alix: he is a show man. he rejected the saudi private fund. >> you a question we don't know the answer to is what are the key elements of dell -- one of the key elements of dell was michael dell rolling all of his stock over to the deal. while we don't know is how many tesla shareholders are going to be willing to just roll into this. david: and maybe insiders, board members. we don't know that. >> that is going to be a key element of getting to that. david: he has already done a number of things we thought could not be done. alix: he sent a car into space. david: let's talk about papa john. ceo ands a shift in the

did -- heter says he wished he did not get put out. he wrote a letter. -- i built this company from the ground up and am still its largest shareholder. results demonstrate i know what works and what does not work for this company. that is john schneider -- john schnatter. >> this was a business that was already struggling. clearly there was a lot of drama there. it will be interesting to see if the price continues to go lower. this could be a private equity target. alix: with garlic sauce. david: thanks so much, jason kelly. coming up, really substantially, that is how much drug prices

will drop according to president trump. we will look at how his next moves could affect companies such as cvs. alix: if you have the bloomberg terminal, you can check out tv and check out anything you may have missed. this is bloomberg. ♪

david: last night, president trump took a break from his vacation to meet with a group of ceos and he promised that next week is going to be a big announcement on drug prices. 's companies are great but their prices are too high -- these companies are great, but their prices are too high. ourd: joining us now is bloomberg biotech opinion columnist. a really big reduction in prices. >> he said this before and what we actually got was a temporary freeze in drug pricing increases

from some companies which did not amount to much of anything. a left intact the previous decade of drug pricing increases -- drug price increases. behaviorof a change in , so we will see something different happen, they just announced the policy that might make it easier for pbs to pbms toe prices -- negotiate prices. david: we keep hearing from people that the pbm rebate situation is something that drug -- sucks money out of the system. is that likely to be addressed? max: that seems like an area that the announcement might focus on. the administration has been examining a rule that would make it harder to extract more profit from these kinds of secretly

negotiated rebates. the question is whether they can do that just in medicare or more broadly. that would tell us how big the impact could be. alix: what can he do on his own and what does he need congress to do? max: that is always the question with these drug pricing initiatives. there is enough he can do with hhs rulemaking. thater this is something -- were you get rid of these safe harbor regulations, the antikickback statutes that eliminate paper play, but you have this loophole in the drug market that lets you promise secret negotiations in order to get drug coverage. the consensus is that at least in medicare, he can mix some ships there. david: which companies can benefit and which companies get hurt. you said the cvs thing could be a benefit if they put the

squeeze on the pbms. max: you have the two big pbm insured deals. , whereacquiring aetna their focus is on lowering costs and extracting extra profit the year rebates -- profit via rebates. the cvs move looks more defensive, especially if you have the kind of impact from the other side of amazon. alix: max nisen, thank you very much. hour, megane next greene, managing director at manulife asset manager -- management. ♪ phones have made our lives effortless.

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which could save you hundreds of dollars a year. plus, get $150 dollars when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. alix: elon musk's $82 billion deal.

he wants to take has loved that she wants to take tesla private -- he wants to take tesla private. -- even as the u.s. drops more tariffs on chinese goods. last call for earnings. the s&p last push on earnings while european come things -- european companies struggle to make profits. david: welcome to bloomberg markets. i am david westin, back with alix steel. alix: earning still coming out and the s&p trading right around a record. $91 million in market cap. just yesterday, tesla made up $7 billion of that. david: the most valuable tweet ever. alix: the dollar-yen lower by 2/10 of 1%.

-- saw potentially a 25 basis point banned for the long end of the curve meaning the boj starts to normalize, a substantial risk for the upside of the yen. the three-year was kind of machine and the yield was kind of high and crude off by a full one percentage point despite good trade data out of china. will speak in roanoke, virginia. l 1:00 this afternoon, the united states is set to spell -- set to sell $26 billion in 2018 notes. at 4:00 this afternoon, 21st century fox releases its earnings after the disney earnings yesterday. alix: tesla taking the spotlight after elon musk tweeting he wants to take the company private. what is the reality of that with dwightught up

stone -- dwight scott of blackstone. lbo, the first word being leverage, it is hard to put leverage on this company for an $80 billion enterprise value. the discussion in the market for the last three months has been one of the company can continue to fund its business without issuing equity into the markets. going private and putting more leverage on that business is very hard to do. you have to compare with dell and dell is a much smaller deal. at the time, they had 5.5% free cash flow. -- the red line is break even. this is -$800 million of cash flow. who is going to lend them money to take this private?

dwight: $10 billion worth of people have so far. they are not than investment grade company. people wanted to have the equity upside. it is hard to lend much more money to a company that is not only negative cash flow but there are still operational issues that the company is working through. david: even on the corporate finance side, you said a lot of that is in converts, tied to equity. if you win private, you could not do that anymore could you? dwight: you can. this conversation is going to get to what this company looks like if it goes private. there are certainly private companies that have converts. valuations, most often it converts. the question is can you go back the other direction? and you take the retail investors who are not qualified

you do withwhat do the fidelity's and others that own the stock -- with the fidelities and others that own the stock. david: china retaliates on tariffs on $16 billion of u.s. goods because united states announced $16 billion yesterday. isx: joining us on tesla erik gordon and rich daily -- and richard daly. richard: there are three people you never underestimate. you never underestimate john rambo, shari redstone or elon real longnk it is a shot, but this is been a long shot for seven years.

people on the street -- david: people will put of the elements of the dell deal. debt, butn was in -- 5.5 billion dollars in cash flow as opposed to negative cash flow with elon musk. how could they do this? rich: cash flow is the key difference here. texas utilities was big but did not work out too well. cash flow is the key thing because the pile on the debt, you have to have cash flow to service the debt. $5.5 billion in cash flow is good if you are running a hundred million dollars negative cash flow a quarter, that is terrible. i don't see how they are going to do it. david: many people are making much of the fact this came out in a tweet and if that is nfc --

and sec violation. -- an sec violation. if that is not right, it could get tricky. rich: he may have handed a smoking gun to these short-sellers that he hates. that -- it is one thing to say i intend to take it private, but to say financing secured is a statement of a fact, of a material fact. how material is it? look at what the stock did. the short-sellers who lost whatever they lost, they are going to be in court and they are going to dig up the facts. was the financing secured or not and if not, if he starts hadtracking and says i have -- i have been having serious talks, he is going to be in serious trouble. alix: this speaks to your world. you have a business of engaging investors. what is the role of twitter in

gauging investors? erik: using technology to engage investors is the way of the future. buts still come into play, using technology in our case, we have eliminated two thirds of the paper through digital technologies and having that --ationship with investors is clearly the way of the future. broadfridgek about 's role, we are the honest broker. at the end of this, it is going to have to come down to shareholder approval. the thing i am confident and is i don't know which way it would go, but i am confident that the street side technology will drive inaccurate result. david: electronic is the way to go. it is also shall media. what are the risks involved in that? when you sit down to write a

letter, you think about the words more carefully. you may have the same regulations applying in terms of materials. achard: when we spun into public company, my lawyer gave me a great -- gave me some great advice. diamonds are not forever, email is forever. tweets are in the same category. broadfridget about but before i do that, i read -- i read it three times to make sure i will be standing behind those words for a long time. alix: i don't believe in punctuation. david: for spelling. , what is going to happen to tesla if this does not happen? erik: i think they still have the underlying problem of getting cash flow positive. musk says it is boring and he is not want to talk about it. it is not boring to pay back

your creditors. when he talks about going to be even, if that happens, that is almost meaningless because he has to expand, 5000, 6000 cars a month, that is not a car company. how is he going to magically do that unless he can raise more money? breaking even does not pay for that expansion. i think musk's feature going forward is they need a lot of cash and they need new cash. not cash the goes from one shareholder to replace other shareholders, new cash to build factories and get out of the waiting tent. david: this is a great point. is going to have to build more runway. is going private going to help him do that or make it more difficult? erik: i don't know, you will load up on debt to go private and then more debt to get out of

the wedding 10. it makes -- wedding tent. it makes musk's life easier. he doesn't have to deal with analysts. it does not make life better for the company as a whole. alix: the better part of the question, what does it mean retail and debt investors? andoes it mean for retail debt investors? what every investor should be interested in is understanding their investments. the first thing i tell them is -- as we go forward under this fromssion, it is clear activities that he is committed in gauging investments -- investors through technology. i expect that starting this coming january when his new 30e3 come out, getting

information, enhanced content, summary content on your phone is going to wait -- going to be the way to follow it. whether it is tesla or any other investment, electronic. -- investment, electronic. david: retailers are not engaged. it is like 90% on the institutional end and 30% on retail. what real-world practical effects is not have? i have seen activist investors trying to change the board out. richard: it is a great point. , activism is an asset class and every ceo is to be aware of activism -- needs to be aware of activism. if you are a ceo waiting for a problem to engage with investors, it is too late. use the technology right now

where the majority of the shares are, where 30% of the shares are retail. go after that two thirds of the and engage in a regular dialogue with them. not a tweet, not something on the spur of the moment -- on a spur of the moment, but a thoughtful message about your strategy, why they should be committed to you and are long-term shortage he and engage them with technology on a recurring basis, so when the problem does occur, you're in a position where we already have a relationship, they already know your long-term views and you have a far liar -- a far higher likelihood of getting them to know you and believe you. alix: does the company need them? when you have the sovereign wealth fund in saudi buying big in musk for example, do you need the retail guys? that,d: if you ask png

the answer is absolutely. in these very tight contests, it comes down to the retail investors. why do you have insurance? what are the chances of your house being robbed or burning down? but when it happens, you are really glad you have that insurance. in gauging with investors is better than insurance. these are people who own your company -- engaging with investors is better than insurance. these are people who on your company. alix: rich daly of broadridge financial and erik gordon of the university of michigan, thank you for joining us. -- chineseariff tariffs starting on u.s. goods on august 3. -- august 23. ♪

taylor: this is bloomberg daybreak. -- is expanding the on real estate. they are buying generic -- general electric energy finance business. the deal includes more than $2 billion worth of loans backed by assets such as pipelines, power plants and windmills. glencore has posted record profit and cut debt to their lowest target. the world's largest commodity trader failed to increase dividends and did not expand the existing by mac at a time when rivals are paying out more to investors. that may leave the door open to more dealmaking by glencore's ceo. snapchat posted

revenue gains that showed it could make headway in the mobile advertising market dominated by facebook and google. snape recorded its first ever decline in daily active users and that worries analyst who were looking for rapid growth. snap won the endorsement of a key investor. a saudi prince has taken a $250 million stake. that is your bloomberg business flash. alix: china hits back. the country says it will slap retaliatory tariffs on the u.s. that will come into effect on august 23, the same day the u.s. will and lament its second round of tariffs on chinese goods. will it have an impact? july.s data from greene,us now is megan manulife asset management's cheap economist. -- chief economist. jump wase import price

largely in oil prices because of value terms, not. volume terms -- not volume terms. it is going to take a lot more in terms of tariffs on chinese imports into the u.s. or china to really feel it. china made this announcement about more tariffs but they cannot continue to protect because they do not buy enough stuff from us. maybe they are not buying as many treasuries. that is offsetting a lot of the effects of the tariffs. businesses to u.s. trying to do business in china, they say just to get goods on boats, the compliance with that has gone through the roof. -- his a tell got switched last minute to a three-star hotel. obviously no economic significance there but very symbolic.

these are things happening behind the scenes. david: china is clearly feeling the economic heat whether it is from tariffs for from something else and they are trying to take various steps to make sure they keep the growth going. megan: the slowdown started at the end of last year. this predates the tariffs. some sentiment could be starting to hit in terms of trade policy. the chinese slowdown was already happening and i will say china was booming. it is ok that it is slowing down a bit but they are trying to push through sums to meatless -- some stimulus measures. alix: as the tit-for-tat continues, earnings in the u.s. rise -- continues to rise and you can see the blue line is earnings estimates for 2018 and the white line is estimates,

they continue to rise. does that meld with the outcome or the worries you have with tariffs? megan: we have a huge amount of stimulus coming down the line for the next year and a half. be u.s. economy should performing above gdp growth. trade war to model a in a macroeconomic model, you would have to zoom in to see any real effect on gdp or inflation. these models are missing a lot. they are not granular enough to count for disruptions in local supply change -- supply chains. there are no distributive effects. i would say there is complacency in terms of trade because there is not going to be much of an impact. i think mainly on a roadside side but slightly on the inflation side, trade should be impacted.

david: megan greene of manulife asset management is going to be sticking with us. coming up, it is not total gender equality, but it is a start. more women are rising to the top economist positions at big banks. ♪ >-- ♪

alix: gender equality on wall street is a long way off but a rising number of women are taking on cheap economist positions at wall street banks. anywhere from hbc citigroup. they make big calls, identify key trends and form rationale for the bank ticky decisions. does that role make a letter for them to climb higher on the street and pave the way for the women that follow? joining us now is the bloomberg fed reporter -- is our bloomberg fed reporter. here is one chief economist with

us, megan greene of manulife asset management. >> we take a look at a couple women, three women who have taken on bank chief economist roles as global head of economics. -- we chattedhem with them about how they got into those jobs and sort of what they see as the latter going forward. -- the ladder going forward. one thing that was consistent was that they were not necessarily looking to get into some big job in banking when they got into economics. two of them were not looking to become economist. they wanted to be correspondents. i don't think she was necessarily laser focused on the private sector. alix: megan, what is your story? megan: i was a molecular biology majors remotes -- major through

most of college. my career path included teaching at a boarding school and it was not until later that discovered what i really love to do. david: one of the viewpoints of --s piece is it,n: that does come into not just with recruiting, but i cannot tell you how many panels i have been on that were all male panels. i cannot tell you how may times i have been the only female on a panel and how many times people have said we really need a woman. alix: what did women end up saying? found of the things i

most interesting about reporting the story is that we are seeing this shift where banks and particularly central banks are starting to value a micro economic skill set and that is good because the gender balance in microeconomics is slightly better than macroeconomics. you have more of a pipeline which i thought was an interesting trend. alix: thank you very much, a great article. megan greene of manulife will be sticking with us. coming up, chemicals on the front line of the u.s.-trade -- u.s.-china trade battle. this is bloomberg. ♪

alix: this is bloomberg daybreak. the s&p right around a record level. futures soft as it feels like a summer wednesday. $91 billion in market cap was added to the s&p yesterday.

$70 billion of that came from tesla. european stocks a little bit lower. in other asset classes, the dollar-yen is the one to watch, down 2/10 of 1%. moving away from its reflation goal and moving into mitigating any disasters from monetary policy? if yes, it means a stronger yen. down 6/10 ofe is 1%. crude rolling over 1%. we saw the highest yield in three years -- in three-year since 2007. david: let's find out what is going on outside the business world. taylor riggs is here with the "first word news." taylor: a republican candidate backed by president trump holds

a narrow lead in a special election for congress. several thousand provisional ballots still have to be counted. the race is seen as a test of the president ticky influence ahead of the -- president's influence ahead of the november elections. -- he gave no further explanation but the president with -- after the health and human services secretary told bloomberg they will allow private insurers to bargain over drug prices. china is striking back. beijing is imposing retaliatory tariffs on $16 billion of american products starting august 23. the announcement came hours after it from administration announced they would impose 25% tariffs on $16 billion worth of chinese goods the same day. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120

countries. this is bloomberg. alix: one industry that does stand to lose big in a trade war is the petrochemical one. they said they could be , making china one of the most important trading partners. 40% of the products on china's tariffs list are chemicals. i spoke with the ceo of one of the biggest petrochemical companies in the world to get his take. where are we on the u.s. versus china world? how are you affected? >> it is possible that trade patterns shift. to the extent that china needs imports of punt -- of polyethylene, the u.s. goes behind and exports to the country, there is a new

shortage. alix: i can infer that means some of the european products will go to china and u.s. products go to europe. is that something you can actually do? bob: more likely it will be some of our products from the middle east. europe is becoming very balance balanced. how flexible is your business to manage? bob: we have similar types of assets around the world and supply chains can shift within 60 days very easily. alix: do you think a trade war could dampen the flow of money we have seen into the u.s.? bob: i think this is very real and this is the long-term impact that we have to keep an eye on. it could impact how much we built in the u.s. to capture shale gas depending on markets.

it could also result in more investment in the end market itself, rather than here in the u.s. we are thinking through that and are thinking through the implications, certainly it is a tax in a way and it reduces the returns on our project. david: has anything -- alix: has anything been delayed in your industry? bob: not that i know of. alix: what would scare you the most? what would you need to see to say we have to put the brakes on and think about this? bob: does china need the imports of polyethylene? based on getting it from somewhere else, that is not you. bob: right. if they are getting it from somewhere else, how is that demand being met? go back to what i said about trade patterns shifting.

globalely, we care about supply and demand and we want to know that that global supply-demand balance is such that more capacity is needed. alix: i know you are chairman of the american chemistry council and the president of the other week that raising tariffs on chinese chemicals and plastics to 25% would be devastating for chemical manufacturers. bob: it would significantly impact margins for our products. been talking to the administration about chemicals and frankly my concern is more about longer-term investment. structural decisions that are made and if you think about when we invest in new capacity, we are building a plant that is going to last -- plan that is going to last 50 years. we cannot change it and go somewhere else. once these decisions are made, they are pretty durable. alix: that was bob patel of

lyondellbasell. you can catch another part of my interview with him tomorrow on my show at 1:00 p.m. eastern when we talk about growth. how does that get derailed if there is some trade war? moneyhas been a lot of poured into the u.s. patrol chemical industry -- petrochemical industry. it was an interesting interview. david: and not unique to the ceo. megan greene of manulife asset management is still with us. we talked about the macro aspects of the u.s.-china trade disputes. what about the micro? ubs has a report out saying if there is a trade war, 90% say they will cut down on capex.

anecdotally, you hear firms saying the environment is so uncertain that we are going to delay and defer our capex spending. that is a huge deal because capex spending is what we need to boost productivity growth in gdp. without that we are a 2% economy. david: willing to delay and affair without resolution because of the uncertainty. megan: you are starting to see this come through in some of the sentiment indicators in the u.s.. the latest ifn survey shows that companies are feeling less optimistic. still staunchly in growth territory but less optimistic about input costs and they say it is because of trade. alix: what i find interesting is what bob was saying is not necessarily that he would cut capex, but would reallocate it. what does that mean regionally versus globally? are we still fine in a growth

scenario but the u.s. suffered? -- suffers? the u.s. is the big loser in that, is the take-home message. most people don't realize that many of these tariffs will never be paid because exporting soy to china, instead, export it to brazil who will export it to china. what about the u.s. consumer? 60% of the companies would increase -- they would pass along the cost essentially. how concerned are they about .eflation megan: -- i think even though a lot of firms are saving -- saying on earnings calls that they will pass on the cost to the consumer, they don't feel like they have that much pricing power now that we are operating in an environment where amazon is essentially setting prices in

the marketplace. -- because they're trying to maintain market share. alix: does china have more pricing power than we think? megan: that is probably true because they don't have the amazon affect. -- amazon is that -- amazon effect. if you look at all of china's priorities, one of them is to reduce their budget deficit. they cannot do that if they are trying to boost growth and they're trying to backstop the consumer. they're going to have to give up on some of these goals and figure out their priorities. on the same levers they always do. david: megan greene of manulife asset management, thank you for being here. coming up, we will take a look at lending standards with the ceo of the biggest bank in oklahoma. that is next. ♪

taylor: this is bloomberg daybreak. coming up on bloomberg markets, balance of power, the former u.s. housing and -- secretary. and now let's get your bloomberg business flash. it's $60 billion

takeover of aetna is set to close. the drugstore chain says it is working productively with regulators. bloomberg is learned of the antitrust board does not see competitive problems that can stem from uniting companies at different levels of the supply chain. the city of newark, new jersey is ready to add $1 billion in tax breaks to its pitch for amazon's second headquarters. the city council is expected to approve the plan today. it would be part of a $7 billion package that -- is dangling in front of amazon. newark is one of 20 companies on the -- 20 -- on the company's shortlist. -- an upbeat view of the new video streaming service and a takeover of 21st century fox. he says the new espn online service is attracting more subscribers than forecast.

that is your bloomberg business flash. david: for more on disney's earnings, joining us now is moffettnathanson senior researcher, michael nathanson. welcome to the program. listening to what bob had to say forward,ll, let's look it is all about what is coming around the corner. how did analysts react? michael: i think that is right. we are now looking at the potential of his new strategy of the disney strategy and the near term, we are ignoring early fundamentals and looking at how many people can they add on the ogt platform? what is the cost of that business? we are all waiting for his next set of details enclosing the fox deal. no one is really focused on the

short-term. david: how long will investors give disney and bob iger before they have to know exactly what the costs are and they get some real indication on the result? michael: that is a good question. in the next six months or so, disney will have an investor day and we are expecting them to lay out the cost of the buildout. i would say in the next six to nine months, we will know the cost. in terms of whether or not it is a success, we will know in about a years time. it is going to take a year and a half or so to get our first indications of how big this could be. together, weose will know the costs and we will have to wait to start testing this idea to see if it is successful. probably another 18 months to go before the market ways in on whether this has been a good idea and how large this concept could grow. david: with the completion of

the 21st century fox deal, this will be the largest most dominant media company in the world. at the same time, the way you describe this, there are two things going on. this is a difficult merger to effectuate any way. much different then adding pixar or lucasfilm's. -- lucasfilm. on the other hand, we don't even know what this is yet. can they put this all together and beat netflix? i am not sure that they are looking to beat netflix. on the call last night, we asked questions along those lines goal what is the ultimate for you and i think they see it as there is a place in the thatt for a disney service is in addition to netflix. this is not a winner take all business. people have hulu, amazon, hbo,

showtime and netflix. what disney was to do is build a product that as more people move to over the top, that disney is one of those top three products. an we heard last night was ambitious vision but not a netflix winner take all strategy. what they are trying to do is leverage their brand strength, their film library, their film release schedule, their customer loyalty and build a product that is going to be considered in time as an over the top option. they don't want us -- they don't want you to think that this is going to be winner take all between them and netflix and amazon. that is not what they are going for. david: thank you so much, michael nathanson of moffettnathanson. alix: the private market versus bank loans. in the most recent fed senior

officer loan survey, they are reducing lending services for large firms. private equity has been the backstop for loans as banks tighten their belt. of gsoed to dwight scott capital partners about that environment. banks have really shrunk in the number of banks and they cannot quite often -- they were part of a group of a syndicate that would provide capital to these companies and they cannot do it on their own, so there are just not as many of them anymore to provide that capital. we provide a little more capital to a buyout firm that is trying to do this and so while we won't -- while we are more expensive, we do provide some leverage to their returns. alix: joining us now is steve bradshaw, bok president and ceo. talk to us about the lending environment you see right now. steve: it has been incredibly

robust. had our highest loan growth order in the history of the bank in the second quarter. building throughout the first part of the year. i think the fact that business optimism is higher and the fact that we have also removed the uncertainty around health care and tax reform has really improved the capex outlook for a lot of our commercial clients. alix: are you mostly lending to small, large or medium? the medium-sized market still needs that private equity market where the larger firms can get money from banks. who do you lend to? steve: our sweet spot is in the middle market. clients in that $500 million or less in annual revenue. their appetite for bank debt really abs and flows with their capital -- really ebbs and flows with their capital spending.

part of their financing landscape. as we are seeing expansion among our clients, -- we have seen that over the last three quarters. alix: what are the expectations going forward? are you hearing companies wanting to pull back, starting to think about it? michael: the biggest -- steve: the biggest dialogue in our footprint is in texas and there is a lot of concern around nafta. the state of texas is a huge exporter to both mexico and canada. it would impact transportation, logistics, warehousing and also the oil and gas industry. there is a growing level of concern about trade constraint but at this point, it is not really translated into a reduction in capital expenditures at least from where we sit. alix: how much competition do

you feel in the lending space, the you have to lower your standards in order to get the business? steve: that is not something we would ever do. are 100 years in the business and we are very disciplined from a credit perspective. we probably see more pressure around pricing than we do structure because we simply won't modify structure. it is an intense and competitive environment. i think banks have had a lot of pent-up opportunity to lend. ratios are historically low, relative to three recession. -- pre-recession. competition is fierce for us as a middle market lender. we are very focused on relationships and all the benefits we can bring to clients as well. that is our sweet spot and why we are seeing the growth we are. alix: what kind of sectors are you seeing the most activity out of right now? steve: for us, a significant part of our footprint, oklahoma,

texas and colorado are energy-based. it is a $3 million portfolio for us, one of the biggest in the bank and that sector has recovered and is increasing activity now to $70 per barrel prices. that is certainly a growth area for us and we would expect that to continue. anlth care lending is important vertical for us at bok financial as well. we see that expanding over the next 18 to 24 months also. commercial and industrial, bread-and-butter companies in the manufacturing sector and service sector, those that we are seeing maybe the most growth plans that are rolling out and we would expect that to fund up as well. all of those areas have momentum today and we have seen that carry over to the third quarter. alix: are you going to have to hire more people? what about your actual business structure side? steve: we are always adding

talent. that is important for us. the competition for strong lending officers, those with good relationships has always been competitive. i would say it is at a higher level today as all banks are seeking an opportunity for growth. our sweet spot is that we are much more than just a lender. we bring a lot of ancillary services in. a lot of our feedback comes from -- businesses. you have a much stronger slate of opportunities to serve your client than those that are just focused on the lending side. alix: really great to catch up with you, steve bradshaw of bok financial. also i want to point out we have some breaking news. the financial times coming out and saying that saudi arabia is beginning to selloff its canadian assets. the market reaction is immediate. david: what i am watching today

is the trial of paul manafort taking down -- taking place down in alexandria, virginia. we go live to get an update on where we are in the trial. rick gates is about to conclude his dramatic testimony. >> he returns to the witness stand today from another hour of cross-examination. he was on cross-examination for a couple hours yesterday where he answered a number of tough questions and admitted that he had an extreme affair funded by money he stole from his boss, paul manafort. that he embezzled a great deal of money although that amount is in dispute. he may have submitted false expenses to the trump inaugural committee. essentially what manafort-gates lawyers is trying to do is try the credibility of rick gates who is the star witness for the special counsel and raise doubts in the minds of jurors about whether they can believe rick gates but also the allegations in general that have been raised

by mueller's prosecutors. david: how strong is the prosecution's case if the jury does not believe dates? gates.s -- >> there are a number of documents that suggest manafort with the help of gates took steps to hide his offshore accounts in cyprus from u.s. tax authorities and lied to banks. a decent case without the jury believing dates but -- believing gates, but if the jury does believe gates, it would greatly strengthen their hand. there have been a number of witnesses that have testified to corroborate documents in evidence. the entire case does not hang on gates, but if he holds up well, it would considerably help mueller. david:

president trump? >> president trump's name has come up a couple of times. there is a banker who extended loans to paul manafort. there was evidence that was introduced just j -- introduced just yesterday. alix: thank you so much. that wraps it up for bloomberg daybreak. coming up on bloomberg markets: the open -- this is bloomberg. ♪

>> 30 minutes until the start of trading. this is the countdown to the open.

jonathan: coming up, more stormy weather. his tesla considering the biggest buyout in history? try -- china weathering the chain storm -- trade storm. stocks inching back from an all-time high. it is time to turn caution and defensive. 30 minutes away from the opening bell. we grind toward the record high of potentially six straight weeks of gains. softer are little bit and down by four points. fx market, dollar strength in g10. euro-dollar back to 11581. treasury, stable. 297 is your yield this morning. musk sayingy, elon he is thinking of taking the company private. shares soaring on the news. every questionable announcement. >> this type of news